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Supreme Court ensures much of health law lives another day

The act's key and controversial mandate provision is valid as a tax, the majority decides

By David G. Savage / McClatchy Newspapers

LAST UPDATED: 2:12 a.m. HST, Jun 29, 2012

WASHINGTON » Led by a chief justice who some conservatives immediately branded a turncoat, the Supreme Court upheld most of President Barack Obama's health care law Thursday, resolving a high-stakes constitutional clash not seen in decades and handing Obama a victory that surprised many in Washington.

Chief Justice John G. Roberts Jr. and the four liberal justices joined to uphold the Democrats' most ambitious social legislation in a generation.

The unpopular requirement that nearly everyone buy health insurance or pay a penalty — likened by detractors to a rule that everyone purchase broccoli — was unconstitutional as a mandate, Roberts said, but valid as long as it was simply considered a tax.


Lots of big changes in the 2010 health care law have yet to take effect. Here's how they are to unfold:


» Payroll taxes rise for individuals making more than $200,000 a year and couples above $250,000. These people are also hit with a 3.8 percent tax on investment income.

» A 2.3 percent excise tax begins on sales by medical-device makers.

» Taxpayers must spend more on unreimbursed medical care before claiming itemized deductions.

» Start of program to encourage creation of nonprofit, member-run health insurers in each state.


» Almost everyone required to be covered by either private or government-run insurance or pay a penalty to the IRS.

» Most employers face penalties if they don't offer coverage to their workers.

» Insurers prohibited from rejecting people with medical problems or charging them more.

» Insurers can't charge women more than men.

» Medicaid program for the poor expands in states that take part: It covers childless adults for the first time. And it takes in people with incomes up to 133 percent of the federal poverty level, or $29,327 a year for a family of four.

» Newly created, state-based insurance markets make it easier for individuals and small businesses to find affordable coverage.

» Subsidies help many people, including some upper-income families, buy coverage through the state markets.

» Tax credits to help pay for health plans at businesses with 25 or fewer workers reach their maximum. For businesses with 10 or fewer employees, the credits will cover 50 percent of the cost of premiums.

» New fee on health insurers begins.

» New limits on savings in flexible spending accounts begin.


» A 40 percent tax on high-cost, employer-sponsored health plans begins. The tax falls on plans worth more than $10,200 for individuals and $27,500 for families.


» The gap in Medicare's prescription drug coverage, known as the "doughnut hole," is fully eliminated after years of phase-out. After that, seniors will pay 25 percent of the cost of their medications up until Medicare's catastrophic coverage kicks in.



» Copayments for preventive care for all ages have been eliminated.

» Young adults can stay on their parents' insurance up to age 26.

» Insurers can't deny coverage to children with health problems.

» Policies can't limit how much they'll pay over a person's lifetime.

» Older people save money through improved Medicare prescription benefits, which are phasing in through 2020.

» A temporary program helps people with pre-existing health problems get coverage.

Source: Associated Press


"We do not consider whether the Act embodies sound policies," wrote Roberts, a conservative appointed to the court by President George W. Bush in 2005. "That judgment is entrusted to the Nation's elected leaders. We ask only whether Congress has the power under the Constitution to enact the challenged provisions."

Obama, who had staked the success of his presidency on passage of the law, initially thought he had lost when Fox News and CNN incorrectly reported the mandate had been struck down. But after he retreated to his offices to ponder his defeat, White House counsel Kathryn Ruemmler walked in to give him the thumbs-up.

"First, there were dark clouds," one aide said, "and then there was joy."

Obama's first call was to Solicitor General Donald B. Verrilli Jr., who had insisted on presenting the tax argument to the justices.

Later the president went before television cameras to pronounce the ruling "a victory for people all over this country whose lives will be more secure because of this law and the Supreme Court's decision to uphold it."

Republican presidential candidate Mitt Romney, who also awaited the court's decision in Washington, used the ruling as a call to arms.

"Our mission is clear. If we want to get rid of Obamacare, we are going to have to replace President Obama. My mission is to make sure we do exactly that," Romney said, standing behind a lectern decorated with a sign that proclaimed "Repeal and Replace Obamacare."

But the decision was not a total victory for the administration. One part of the law would greatly expand Medicaid to cover an additional 17 million low-income persons. Although Washington would pay nearly all the extra cost, states ultimately would pay a small portion of the bill.

Roberts said the required expansion of Medicaid would violate the rights of states by threatening them with the loss of all their Medicaid money if they refused.

"The states are given no choice in this case," Roberts wrote, likening the requirement to "a gun to the head."

Instead, Roberts wrote, states must be given the right to opt out of expanded coverage. That raises the likelihood of a wide gap in coverage between states with Democratic majorities, which are already eager to cover more residents under Medicaid, and conservative states which are likely to say no, even if it means turning down large amounts of federal money. Already on Thursday, some Republican governors were saying they would opt out.

Overall, the new law, which already is being phased in, will require insurers to offer coverage to all, even those who have serious diseases. And it will require those who can afford it to carry "minimum" coverage. Republican state officials sued to strike down the law before it could take full effect, arguing this insurance "mandate" amounted to an unprecedented and unconstitutional overreach by the Democrats.

Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan joined Roberts to form the majority, but said the mandate was constitutional even without considering it a tax.

Justice Anthony M. Kennedy, normally the court's swing vote, found himself in the unusual position of speaking for the four dissenters in a major case. They would have thrown out the entire law.

Speaking in harsh tones, Kennedy said the court majority "regards its statutory interpretation as modest. It is not. It amounts to a vast judicial overreaching. It creates a debilitated, inoperable version of health care regulation that Congress did not enact and the public does not expect." Justices Antonin Scalia, Clarence Thomas and Samuel Alito Jr. agreed in the joint dissent.

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